Global Illicit Financial Flows: Where does Dirty Money from Developing Countries become legal?

Abstract

The study determines most favorite destinations for money laundering preferred by wrong doers from 25 developing nations selected on the basis of highest illegal financial fund outflows from 2004 to 2014, a report published by Global Financial Integrity (GFI) in 2015. Firstly, it has been discussed that how money laundering activities are shackling the economic and financial stability in a country by distorting and damaging different sectors of economy as well as financial sector. Walker's Gravity Model has used to determine the most preferred destinations for money laundering. Research indicates that most developed and stable economies with lax controls are preferred by criminals. Robustness has been checked through triangulation method. It is recommended that uniform controls at global level are essential to eliminate havens and the need of international body which shall be responsible for policy making and enforcement of strong regulations is also highlighted.